MLBPA continues to fight 'brand agreement' bill

The Major League Baseball Players Association is fighting a bill in Delaware it believes exposes players to troublesome gambling conflicts while the sponsor of the bill believes it will help benefit minor league players whose minuscule salaries force them into "difficult financial realities."

The Professional Athlete Funding Act, which this week passed through the Delaware House of Representatives and is scheduled to be voted on by senators Sunday afternoon in the last day the legislative session, would enforce regulations on so-called "brand agreements." The deals, which have become commonplace in the last five years, typically offer players a lump sum of money in exchange for a fixed percentage of future earnings.

The bill's benefactor, former Philadelphia Phillies pitcher Michael Schwimer, has for two years lobbied legislators in Delaware to adopt laws he said will shield athletes from those seeking to take advantage of them. Schwimer is the CEO of Big League Advance, one of the most prominent brand-agreement companies, and has used venture-capital funding to pay more than $50 million for pieces of 167 players' potential major league salaries.

"There's one reason and one reason only for this bill: to protect players from bad actors," Schwimer told ESPN. "Unfortunately, the current law doesn't protect players."

The MLBPA believes the proposed law does not, either, a sentiment that is backed by Major League Baseball, according to sources. The parties agree the bill does not go far enough in regulating the industry after representatives rejected proposed amendments before passing the bill 29-12 earlier this week. If the senate passes the bill Sunday, it would go to Gov. John Carney (D) to be signed into law.

The bill proposes to protect athletes from "unscrupulous investors" by ensuring brand agreements are written in an athlete's native language, that they cap the amount of future earnings a player can offer at 15 percent, that payments end with the athlete's playing career and that the civil fine for violating the law can be up to $5,000.

Further, the bill's proponents said, it codifies another avenue for minor league players to receive money after Congress last year passed the Save America's Pastime Act, which stripped minor leaguers of minimum-wage-protection laws and was supported by more than $1 million in lobbying by MLB. Minor league players are notoriously underpaid, with a vast majority of the more than 7,000 earning less than $10,000 a year.

While the MLBPA does not disagree that regulation on brand agreements are necessary, it does not believe the Professional Athlete Funding Act goes far enough.

"The Players Association and I spent time in Delaware attempting to help the members craft a bill that would meaningfully protect minor leaguers from exploitation in their careers," MLBPA special assistant Kevin Slowey, who testified in front of the Delaware house, told ESPN. "We offered a number of amendments we felt would be critical to helping players both financially and from potential exploitation outside the financial world."

The amendments proposed by the MLBPA and rejected by representatives included:

•The debt obligation for an athlete ending when he or she has returned a particular multiple of what originally was given. For example, if a baseball player receives $1 million from a brand-agreement company for 10 percent of his career earnings and makes $300 million, he would pay 30 times the original sum given.

•Prohibiting the assignability of the contract. Big League Advance's brand agreements can be bundled and sold, similar to mortgages that get packaged into collateralized debt obligations, and athletes can owe money to entities with which they did not enter into an agreement.

•Barring individuals or companies with gambling interests from entering into brand agreements with players.

Schwimer, who is also CEO of a sports-wagering company, Jambospicks.com, and is a regular contributor to ESPN's Daily Wager TV show, does not believe there is a conflict running one business owning percentage of athletes' careers and another in which he offers advice on games that could include those players.

"Somebody can run two companies," Schwimer said. "Big League Advance, the company that's investing in players, has absolutely, unequivocally zero ties to anything gambling-related.

"All the union is trying to do there ... is cause confusion," he added. "Gambling -- that, to me, is hilarious. It's a joke. When they brought that up, I literally thought they were joking.

"If there's anybody that would never, ever, ever bet against a guy or tell a guy to throw a game," Schwimer continued, "it's somebody that owns a percentage in their upside."

Rep. Tim Dukes (R), the House Minority Whip who opposed the bill, said there are flaws in Schwimer's argument -- and that the gambling-brand agreement conflict is real.

"Someone could go to a player," Dukes told ESPN, "and say: 'We fronted you $350,000. We need to make sure you give up five runs today. And if so, we can relieve some debt.' It sets up an avenue for gambling and wagering and paying off players. Honestly, I think it has the potential to ruin baseball."

Schwimer said capping the multiple on a rate of return could ruin his business -- and he sees brand agreements as a tool instead to save players' careers. Players can take the money, which is subject to taxes, and use it for myriad things, whether it's better training, better nutrition, helping family or even paying rent, which a number of players struggle to do in-season. Schwimer said he approached the MLBPA during his two-year career with the Phillies with a proposal to raise minor league salaries but was rejected.

"I've been fighting since I was in baseball to raising minor league pay," said Schwimer, who criticized the MLBPA for not fighting harder for minor league players. The union technically represents only the 1,200 players on major league teams' 40-man rosters, 750 of whom are in MLB, though it does bargain for domestic and international amateur player signing rules.

MLB currently is formulating a plan to increase pay to minor league players, according to sources, and the Toronto Blue Jays planned to boost their pay scale for minor leaguers this season. Even then, it's unlikely to stifle the brand-agreement business.

"These agreements have allowed players to receive money when they need it most," wrote Jared Ruxer, a former minor league pitcher who said he signed an agreement with Big League Advance, in a letter to Delaware lawmakers last year. Ruxer, according to Schwimer, plans to testify Sunday before the senate vote.

Schwimer said he also has letters of support for the bill from a half-dozen other players, including one currently on a major league roster.

Slowey, the MLBPA special assistant, also intends to testify for a second time and wrote a letter this week to senators urging them to consider the amendments.

"The true purpose of this bill," Slowey wrote, "is not to benefit minor leaguers as a whole, but rather to immunize a very specific business model that affects only a tiny fraction" of minor league players. "This bill is designed to benefit and protect a specific type of lender, not minor league players as a whole."

In a statement, Rep. Valerie Longhurst (D), the sponsor of the bill, called brand agreements "an investment" and added: "Delaware is already nationally known as a leader in contract law, with many businesses across the country stipulating that their contracts are under Delaware law. We felt it prudent as a leader in contract law to expand our regulation onto player brand agreements to provide some regulation on a business that will continue to exist with or without these regulations."

Longhurst did not respond to further questions from ESPN.

"Why do we need this in Delaware?" Dukes, one of the dozen representatives who voted against the bill, said. "We're trying to keep the riff-raff out. Well, I feel like it's already here. It's a poor reflection. I'm disappointed that it passed. I just hope that not too many young men get taken advantage of.

"I think it's indentured servitude all over again. I think it's unhealthy for baseball."

He pointed to the lawsuit filed in February 2018 by San Diego Padres catcher Francisco Mejia, who accused Big League Advance of "unconscionable" tactics in securing 10 percent of his career earnings for $360,000. Mejia dropped the suit last August and issued an apology to Big League Advance in which he said: "I am happy with my agreement with Big League Advance, and appreciative of the information and support they provided to me. To be clear -- I do not believe Big League Advance has ever deceived me. All of my interactions with Big League Advance and specifically Michael Schwimer have been very professional and respectful.

"I believe that Big League Advance offers a great option for all minor league players, and one that worked for me and helped me focus on baseball and fulfill my dream of reaching the major leagues," Mejia's statement continued. "I want to make clear that I fully intend to honor my original agreement with Big League Advance. I apologize to BLA for filing the complaint and I have agreed to pay a portion of their legal fees as a result of my actions. I am happy to be putting this entire situation behind me and I am looking forward to focusing on baseball and continuing my professional baseball career."

What's clear, Schwimer said, is that brand agreements are now a significant part of the baseball world -- and that the Professional Athlete Funding Act, if passed, would be "bad for companies."

"This bill guarantees that players will understand what they're signing," Schwimer said. "It's bad for companies. We could get away with whatever we want to get away with right now, and it's awful. That has to stop."

Source: Espn.com

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